Letting agents who make their money through let-only fees have been the hardest hit by the pandemic, a veteran property sector consultant has said.
Writing for The Negotiator, Adam Walker, who has over 40 years in the business, noted that many agents in the sector had done far better than expected, not least because of the help the government has provided. Many actually managed to make a record profit as parts of the property sector boomed.
This was despite some clear disparities, such as property demand being must stronger in rural and suburban areas and far weaker in inner city areas, Mr Walker noted.
However, let-only agents have been hit hard because they earn their keep from the fees they get when there is a change of tenancy. Because there have been far fewer of these, their income levels have plummeted and many may not survive, He stated.
Mr Walker added: “The disparity between the fortunes of managed agents and let-only agents has been so sharp that I believe the Covid pandemic may well be the catalyst that finally ends the let-only business model.”
All this suggests that people seeking rented properties will find letting agents in Upminster and other outer London areas will most likely be operating on a managed letting model.
Mr Walker also predicted the end of let-only agencies will be caused by new legislation requiring more checks such as energy performance, references and much else, as leaving all this to the landlord could lead to fines being incurred by the agent.
The good news for tenants is that in this situation, with managed letting agents ensuring full compliance, they will benefit from important checks like energy performance and gas safety, to ensure they stay warm and safe.
A key reason tenants will be unlikely to start moving in large numbers new is the high number in arrears with rent, with the National Residential Landlords Association recently publishing research data showing this applies to 80 per cent of tenants.
This could mean serious credit score problems for those in arrears, who will need to make up the shortfall and then build up their credit score to get another tenancy.